European Rating Agency Scope Plans Global Expansion Drive and IPO

Scope Ratings, which brands itself as Europe’s home-grown alternative to S&P, Moody’s and Fitch, plans a U.S. expansion drive and a stock market listing in the coming years, its founder and chief executive has told Reuters.

Berlin-headquartered Scope has seen its revenue grow by 25% since becoming a late last year and had also been actively recruiting some of Europe’s top banks and insurers as shareholders in recent years.

CEO and founder Florian Schoeller outlined to Reuters in an interview the firm’s expansion plans and medium-term goals as it seeks to catch up with much bigger rivals:

The first is to beef up its European business to be a more substantial challenger to what Schoeller termed the very “U.S.-centric” views of the three major rating agencies S&P Global, Moody’s and Fitch.

In two or three years, Schoeller said the firm wants to start expanding outside Europe, especially to the key U.S. market but also in Asia potentially too.

In order to gain the trust of U.S. investors, Scope needs to be in New York and get Securities Exchange Commission-approved Nationally Recognized Statistical Rating Organization (NRSRO) stature, Schoeller said.

“I cannot tell you if it’s exactly two years, it’s three years or one year… the key element is, are you fully committed to go down this path?”

Asked whether Scope could look to accelerate the process by buying a U.S. rating agency, he said: “M&A? Definitely, it’s an option,” pointing to how Scope had bought smaller European agencies over recent years.

The firm also intends to list on the stock market.

“That’s the overall plan,” Schoeller said. “But we need to prepare. You need to have a certain revenue level, you need to be profitable, you need to have a growth momentum.”

He signaled such a move wasn’t imminent, however.

“My gut feeling is that it would be too early to go to the stock market now,” he said. “Like with every IPO, it’s not only the company, it’s also the market that needs to be right.”

He declined to say whether the firm was currently profitable.

Broader Context

Germany’s DekaBank and Vienna Insurance Group became Scope’s newest shareholders, Scope said on Tuesday.

Scope Group’s shareholders also include CEO Schoeller and anchor investor and German billionaire Stefan Quandt, alongside institutional investors from across Europe including BPCE, Credit Agricole, insurance companies AXA, HDI/Talanx, Signal Iduna, SparkassenVersicherung and Swiss Mobiliar; as well as RAG-Stiftung, one of Germany’s largest foundations.

European Securities and Markets Authority 2024 data shows Scope’s share of the ratings market ticked up to just over 1.8%, compared to almost 48% for S&P, 30% for Moody’s and nearly 12% for Fitch.